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GDP and CPI: Tracking the Macroeconomy- End of Chapter Problem Consider the following statement: "GDP has increased by 2% from last year. This is a good indicator of economic well-being, as it represents an average increase in incomes." Why is this statement is misleading? GDP measures output but not income. It doesn't account for price changes. Economic well-being isn't fully reflected in an aggregate measure. GDP, unadjusted, doesn't measure average income.

GDP and CPI: Tracking the Macroeconomy- End of Chapter Problem Consider the following statement: "GDP has increased by 2% from last year. This is a good indicator of economic well-being, as it represents an average increase in incomes." Why is this statement is misleading? GDP measures output but not income. It doesn't account for price changes. Economic well-being isn't fully reflected in an aggregate measure. GDP, unadjusted, doesn't measure average income.

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Measuring A Nation's Income
Section: Chapter Questions
Problem 5PA
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GDP and CPI: Tracking the Macroeconomy - End of Chapter Problem Consider the following statement: "GDP has increased by 2% from last year. This is a good indicator of economic well-being, as it represents an average increase in incomes." Why is this statement is misleading? GDP measures output but not income. It doesn't account for price changes. Economic well-being isn't fully reflected in an aggregate measure. GDP, unadjusted, doesn't measure average income. Incorrect
Transcribed Image Text:GDP and CPI: Tracking the Macroeconomy - End of Chapter Problem Consider the following statement: "GDP has increased by 2% from last year. This is a good indicator of economic well-being, as it represents an average increase in incomes." Why is this statement is misleading? GDP measures output but not income. It doesn't account for price changes. Economic well-being isn't fully reflected in an aggregate measure. GDP, unadjusted, doesn't measure average income. Incorrect
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